Tag Archives: job creation

With unemployment reaching its lowest level since 1975, it may seem like the state of the labour market has improved in recent years. However, a closer look at the statistics suggests that this is not necessarily the case.

The strong performance in the labour market in part reflects the growth in self-employment, which has been a distinguishing feature of the labour market’s recovery since the last recession.

Growth in self-employment

There were almost 750,000 more self-employed in the UK workforce at the end of 2014 than at the start of the global financial crisis in 2008, representing a high proportion of the total net growth in jobs over this period. Self-employment accounts for over 15% of those in work in the UK – 4.8 million of a workforce of around 32 million. Between March 2008 and March 2017, self-employment accounted for almost a third of total employment growth.

The significance of the contribution of self-employment is highlighted in a recent article published in Regional Studies, which notes that of the 920,000 net new jobs created between quarter 1 of 2008 and quarter 2 of 2014, 693,000 were in self-employment.

There has also been a rise in the share of female self-employed and those that work part-time, in addition to growth in a broader range of industries and occupations among the self-employed.

Recent ONS figures also show that the growth in self-employment between 2001 and 2016 has been driven mainly by those who have a degree (or equivalent), leading to the share of the self-employed with a degree or equivalent increasing from 19.3% in 2001 to 32.6% in 2016 as a share of total self-employed. As a share of total employment (self-employed and employed), the figures show that relatively highly-qualified individuals are becoming more concentrated in the self-employed.

Earnings growth?

The reasons for this growth has been the subject of much debate, particularly as research suggests “many fail to earn a decent living”. This recent analysis by the New Economics Foundation found that 54% of all self-employed people are not earning a decent living. It also found that the percentage of the labour force in ‘good jobs’ had decreased from 63% in 2011 to 61% in 2016, suggesting that the quality of jobs is perhaps declining.

Similarly, the ONS figures suggest that the self-employment labour market remains financially insecure for its workers. They show that the distribution of self-employed income appears centred around £240 a week, much lower than that for employees, which is centred around £400 a week.

And, according to a recent report from CIPD, their real incomes have fallen more since 2008 than those of employees.

Perhaps, then, the self-employment growth has been driven by necessity rather than choice due to a lack of opportunity in the full-time labour market.

However, the evidence suggests it is not this simple.

Despite the widening gap in earnings between the self-employed and employed, the self-employed continue to have higher levels of job satisfaction than employees. The ONS figures also indicate that self-employed workers were more likely to supplement their income from elsewhere.

This would suggest that choice probably plays a large part in self-employment.

‘Push’ or ‘pull’ effect

There has been much discussion over whether the growth in self-employment is predominantly a result of choice or necessity.

It is often seen as a sign of labour market weakness, with self-employment perceived as a ‘last resort’ where a regular job can’t be found. The evidence suggests that this motivation accounts for just a small proportion of the change, however, with most of the rise in self-employment appearing to be out of choice rather than necessity.

Indeed, the recent analysis in the Regional Studies article, which examined the extent to which self-employment was associated with local ‘push’ or ‘pull’ effects, found little or no suggestion of any net ‘recession-push’ effect on self-employment. It suggests that:

‘pull’ factors are more significant in driving transitions into self-employment;

self-employed business ownership appears not to function as a significant alternative to unemployment where paid employment demand is weak; and

entrepreneurial activity prospers where local wages are higher and unemployment lower.

The uncertainty surrounding Brexit could also be having an effect as declining employer confidence has contributed to a growing number of short-term contracts – potentially making self-employment appear the better choice.

Final thoughts

As the CIPD report highlights, there are probably more opportunities for self-employment now than there were a decade ago. And the self-employed are more likely to value highly aspects of the work, such as its variety, and choice over their working hours and pay.

Across the range of job-related characteristics, it is shown that the self-employed are as satisfied or more satisfied with their working life than employees, resulting in higher levels of overall job satisfaction – a finding that is consistent both over time and from different data sources.

In a time where work-life balance is of increasing importance, it is perhaps no surprise that self-employment is the path of choice.

From Roman roads, to Victorian ‘cathedrals of steam’, transport has played a pivotal role in the development of societies and economies throughout history.

Today, rising energy prices, road congestion, and climate change, as well as reduced household sizes and an increased demand for urban living have put the potential benefits of urban transport hubs back in the spotlight.

Transit-orientated development

Transit-orientated development (TOD) is one response. An American-concept, it involves the creation of high-density mixed-use developments around a transit station or stop, such as a railway station, usually within a half-mile radius (a 10-minute walk approximately). It may include office space, retail, leisure facilities and housing, as well as public areas and green space, and a variety of public transport options.

In Europe, TOD has yet to ‘catch on’. However, it shares many similar principles with the increasingly popular concept of developing railway stations as destinations in their own right – for shopping, working and socialising. Railways often form an important part of a town or city centre, and the combination of transport node and central location has the potential to attract people in great numbers.

The redevelopment of London King’s Cross station and the surrounding industrial wasteland made it one of the first ‘destination stations’ in the UK. Around the station, new homes, shops, offices, galleries, bars, restaurants, a hotel, schools and a university were created, along with 20 new streets, 10 new public parks and squares, and 26 acres of open space. In fact, the redevelopment was on such a scale that the area now has its own postcode – N1C.

As well as environmental benefits such as reduced air pollution and traffic congestion, mixed-use developments in and around railway stations can help meet housing demand, and spur the economic and social regeneration of their surrounding communities. Particular benefits can include:

Increased demand for food, retail and leisure facilities from greater numbers of commuters, residents and workers

Helping high streets to compete with online retailers and out of town developments

Contributing to public health goals through increased walkability of areas

Making good use of previously inaccessible/waste land

Government support

There is strong government support for delivering improvements around railway stations.

The recent Housing white paper recognises the regenerative potential of railway stations, viewing them as key anchors for the next generation of urban housing developments.

Two new sources of funding for railway station developments have also recently been announced: the second round of the New Stations Fund – a £20 million pot to build new stations or reopen previously closed stations; and the Station Regeneration programme – which aims to develop railway stations and surrounding land, while delivering up to 10,000 new homes.

Alongside this, there are also plans to release large amounts of unused railway land for housing – enough to build 12,000 houses across 200 sites.

At the opposite end of the spectrum, there are also a number of successful smaller scale regeneration projects involving railways.

Addressing the challenges

The development of railway sites can pose a number of challenges, including contaminated land, fragmented land ownership and reconciling short-term economic development goals with the longer time scales necessary in larger infrastructure projects.

However, according to James Harris, a policy officer at the Royal Town Planning Institute, planners are ‘uniquely’ placed to work with landowners, infrastructure providers, developers and the local community to help deliver a strategic vision for these locations.

Planners should also be flexible and creative in their approach towards station redevelopments, focusing on outcomes rather than processes, says David Crook, assistant director of station regeneration at the Department for Business, Energy and Industrial Strategy’s Cities and Local Growth Unit. In doing so, he says, planners can help make a station regeneration project ‘more than the sum of its parts’.

With the economic performance of cities and regions increasingly reliant on the skills of their workforce, the longstanding issue of graduate ‘brain drain’ to London and the south is something that needs to be addressed.

Although students attend many of the universities spread across the country, a significant number of graduates flock towards the capital at the end of their studies. According to a recent report from Centre for Cities, this deprives other cities of skilled workers and essentially damages the overall economy.

The evidence

A quarter of all new graduates in 2014 and 2015 were found to have moved to work in London within the six months of finishing their degree. And the highest achievers make up a significant proportion. While London accounts for around 19% of all jobs, of the graduates that moved city six months after graduation London employed 22% of all working new graduates, and 38% of those with a first or upper second class degree from a Russell Group university.

Although most cities experience an overall graduate gain, cities outside London don’t retain the majority of students that move to their city to study – the ‘bouncers’ that drive the brain drain overall, overshadowing any gain:

Manchester lost 67% of these students upon graduation;

Birmingham lost 76%; and

Southampton lost 86%.

Other figures show that 310,000 graduates have left the north in the past decade, contributing to a net average deficit of 7,500 highly qualified workers leaving annually, or 75,500 over a decade.

Northern regions have to some extent offset the effect of local brain drain by attracting enough highly qualified foreign workers to fill the gap. But with reductions in immigration, these regions could be left lacking.

Given the UK’s current position regarding the EU, concerns have also been raised over whether Britain faces a further brain drain of academics to Europe, following Brexit. A recent survey highlighted that 42% of academics said they are more likely to consider leaving Britain after the vote to leave.

Why?

While it may seem plausible to assume that higher salaries are the reason for this brain drain, it appears that the main pull for graduates is the availability of jobs and career progression, which London’s vast labour market offers.

However, as recent research from Homes for the North has identified, these are not the only reasons. It highlights the importance of additional non-work drivers of graduate location decisions, including the cost and quality of housing, quality of local amenities and the prospect of home ownership.

Of the graduates polled, 80% said the quality of housing was important, while more than 60% said the cost of housing was important. The quality of green spaces and local amenities was also deemed important by over 60% of graduates.

What can be done to redress the balance?

There have been numerous graduate retention initiatives at the local and regional level aimed at tackling the uneven distribution of graduates, such as graduate wage subsidies and local graduate job matching. But it seems little has improved. The Centre for Cities research argues that these alone will not tackle the root cause of the graduate brain drain.

It suggests that cities themselves have a vital role to play in ensuring the local job market offers an appropriate number of graduate job opportunities that will allow them to both retain graduates and attract graduates from elsewhere. Policy should therefore broaden its focus to improve local economies by investing in transport, housing and enterprise, rather than focusing solely on graduate retention and attraction policies.

The chief executive of the Centre for Cities commented that the government’s new economic and industrial strategy should be used to strengthen existing devolution deals for city-regions such as Greater Manchester, extending their scope to grow.

Indeed, the industrial strategy green paper, published in January, clearly places emphasis on addressing the economic imbalances across the UK through a number of measures, such as working with local areas to close the skills gap, including new schemes to support the retention and attraction of graduates. However, the strategy has been criticised for providing little clarity on how regional rebalancing and sectoral deals will work in practice.

Final thoughts

While it appears clear that cities outside London need to improve their graduate offer with better job prospects, the evidence on graduate migration suggests it is more complex than this.

As has been argued, the provision of good quality affordable housing could play a role alongside high-skilled job creation and opportunities. With the cost of living in London so expensive, this would make sense, particularly as the average graduate salary in London is not that much higher than the average across other UK cities.

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The Local Government Association (LGA) last week called for greater devolution of employment and skills funding to councils and a ‘radical rethink’ of the way Jobcentre Plus works. Chairman of the LGA’s People and Places Board said:

“Job centres need to engage with more unemployed people for a start and then help more claimants move into sustainable employment. This is crucial to boosting local growth. Councils know best how to do this. We know our local economies, we know our local employers and we know our residents and we can bring local services together in a way central government will never be able to.”

Local solutions

Of course, local solutions for job creation and economic growth is not a new idea. Local development and job creation initiatives first emerged in the 1980s, in response to a ‘new phenomenon of high, persistent and concentrated unemployment’ that national policies seemed powerless to reverse on their own. Since then they have continued to spread and develop.

Although unemployment is at an 11-year low in the UK, according to recent research many countries, including the UK, are seeing widening gaps in the geographic distribution of skills and jobs. And the importance of local solutions has again been highlighted.

The OECD’s most recent edition of Job Creation and Local Economic Development argues that local development is a key tool for addressing the problem of such unequal distribution. Similarly, in its submission to last year’s Autumn Statement, the LGA argued that local government is central to the delivery of locally tailored solutions to national public policy challenges.

Boosting productivity growth, while ensuring growth delivers improved living standards and distributes the benefits of increased prosperity equally, are highlighted by the OECD as the twin challenges facing all policymakers. Underlined as a crucial but difficult task, it is argued that ‘actions originating at any single governance level or policy area will not be sufficient’.

Whole-of-government approach

The OECD report, therefore, examines how national and local actors can better work together to support economic development and job creation at the local level. In particular, it outlines what both national and local actors can do to improve the local implementation of vocational education and training (VET) and SME and entrepreneurship policies.

Among the recommendations for national actors include:

Design VET frameworks that allow local stakeholders to tailor training to local labour market needs while still maintaining a certain level of national consistency

Build the capacities needed to make VET systems more agile locally

Develop a strong national apprenticeship framework that builds a high quality system, includes strategically-designed incentives for employer participation, and allows for flexible delivery frameworks

Maximise the efficiency of SME and entrepreneurship policy delivery by allowing for local tailoring, co-locating services, using intermediary organisations to deliver programmes, and/or developing formal agreements for the division of competences and financing between governance levels

Develop national frameworks and strategies to support disadvantaged young people in entrepreneurship, and clearly assign responsibility for this policy portfolio to a single agency or ministry

Embed entrepreneurship into national education frameworks, while also providing integrated packages of entrepreneurship support in other settings to reach young people outside of the education system

Among the recommendations for local actors include:

Balance the need to meet pressing local labour market demands with ensuring that VET helps to move local economies to higher skilled and value-added products and services

Encourage VET teachers and trainers to maintain contact with local employers and industries to keep their skills and knowledge up-to-date

Boost employer engagement in apprenticeships

Tailor the delivery of apprenticeship programmes so that they work better for a broader range of employers, including SMEs, and disadvantaged populations

Forge connections across administrative borders in developing and co-ordinating entrepreneurship and SME policies

Work with organisations that have already established relationships with disadvantaged youth to maximise the reach of entrepreneurship programmes

David Brunnen, FISP member and an independent telecoms infrastructure expert, explains that although demand for broadband is growing rapidly, the capital still relies mostly on networks of copper wires, which Tech City have described as ‘not fit for purpose’.

The solution, the foundation advocates, is to create a new infrastructure agency, Digital for Londoners (DfL), to ensure that London becomes a ‘Gigabit City’ by 2020.

What are gigabit cities?

In simple terms, gigabit cites provide citizens, business and governments with access to gigabit internet services (1,000 megabits per second or higher). By replacing old copper cables for pure fibre infrastructure, cities can enable public services to take advantage of technology, support businesses to innovate, and improve the lives of citizens. As US President Barack Obama explains, ‘it’s like unleashing a tornado of innovation’.

In the UK, CityFibre, is the main provider of Gigabit Cities. Their network covers 40 cities, including Glasgow and Bristol, across major data centres and busy internet traffic points, and provides 260,000 businesses and 3.7 million homes with gigabit broadband.

On 22nd September 2016, Northampton became the latest UK gigabit city. In an agreement between CityFibre and dbfb, a Northampton-based business internet service provider, businesses will now receive internet speeds of up to 100 times faster than the UK’s average. Paul Griffiths, from Northamptonshire Chamber of Commerce, highlights that this investment will play an important role for start-up businesses competing globally.

The initiative will also help Northampton County Council achieve their target of making gigabit broadband available, countywide, by the end of 2017.

Chattanooga

In 2010, Chattanooga, Tennessee, became one of the first cities to make gigabit connectivity widely available. Its mayor, Andy Berke, has described its introduction as a significant source of the city’s economic renewal.

Gigabit broadband has allowed a tech industry to emerge from a city more commonly associated with heavy manufacturing. Tech companies and investment have been drawn by the ‘The Gig’ – the local name for the network – resulting in the conversion of former factory buildings into flats, open-space offices, restaurants and shops. In the past three years, the city’s unemployment rate has dropped from 7.8% to 4.1%. The mayor has also linked the city’s wage growth to jobs in the technology sector.

‘The Gig’ was funded by a combination of public and private investment. EPB, the city-owned utility company, borrowed $219 million and received a $111 million grant from the US Government. This government-led approach has given Chattanooga broadband speeds greater than Google Fibre, a major gigabit broadband provider. Wired magazine suggests that government involvement raises expectations, and encourages commercial providers to improve their infrastructure.

Stokab, Stockholm

The Stockholm city government have one of the oldest gigabit strategies, founding the private company, Stokab, to deploy and manage their city-wide fibre network in 1994. Stokab was created to help the city benefit from the new digital era by limiting multiple network deployments, and by stimulating the technology sector. The end-to-end fibre broadband network serves 700 service provider businesses and connects 90% of residential premises.

The gigabit network has provided a wide variety of economic benefits, including:

becoming a catalyst for the technology sector (The Kista Science Park has over 1000 technology businesses, with 24,000 employees)

creating growth and jobs valued at €900 million

providing low cost broadband services to business – through increased competition – has resulted in an estimated €8.5 million worth of savings

increasing housing values by €200 million and rental values by €3.5 million per year

Digital inclusion

Although gigabit broadband could create limitless opportunities, it also has the potential to exacerbate existing inequalities. Citizens, and even small businesses, could lose out if they don’t have the skills or technologies to access the internet.

Salford Council realises the important role technology plays in creating vibrant communities. As part of their rollout of gigabit broadband services across social housing, the council are introducing a digital skills campaign to encourage more residents online. Volunteers are being recruited to assist neighbours who are less digitally savvy. As encouragement, they are being offered a free IPad and a free broadband service, if they train more than 20 people a year.

Final thoughts

To compete globally, cities will be looking to introduce gigabit broadband infrastructure. London, as a global technology hub and a key driver for growth across the UK, will need to invest in order to support businesses and meet the expectations of citizens. Government may have to provide greater leadership in order to incentivise private sector involvement. Equally, digital exclusion will need to be tackled, to ensure that everyone can participate in the information society.

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The recent decision by the Secretary of State to refuse planning permission for Spring Farm Ridge wind farm brings into focus the tension between government policy and targets on renewable energy, and opponents of these schemes who are concerned about the possible negative effects of renewable energy developments, in particular on the environment.

Government policy on renewable energy

The UK government “is committed to supporting renewable energy as part of a diverse, low-carbon and secure energy mix.” (DECC, 2012, p.4), and recognises the contribution that renewables can make to energy security, the decarbonisation of the economy and sustainable growth. It has a target set out in the 2009 EU Renewable Energy Directive to deliver 15% of the UK’s energy demand from renewable sources by 2020, and it is anticipated that renewables will play a key role in the UK’s energy mix in subsequent decades.

The most recent update to the Department of Energy and Climate Change’s Renewable Energy Roadmap suggests that the UK is making good progress against this target, although it acknowledges that the siting of certain renewable energy projects has caused concern. It recommended that greater numbers of communities should be actively involved in small-scale renewable energy projects and emphasised the importance of ensuring that communities are properly engaged with, and can see the benefits of, renewable energy developments.

Public opposition to wind farm projects

While wind turbine developments can offer a range of community benefits, wind farms have faced considerable opposition from local residents and other stakeholders concerned with environmental and other costs of such developments, particularly their visual impact: optimal sites for developments tend to be in rural, coastal and remote locations in which the natural environment is prized.

While there has been much debate around nimbyism, with suggestions that people tend to favour wind power until schemes intrude upon their local areas, developments may well have an impact at the individual level: a recent study has found that operational wind farm developments reduce house prices in areas in which turbines are visible, in comparison with locations where they are not visible.

In its campaign against a wind farm development, Allt Duine, on the edge of the Cairngorms National Park, the Save the Monadhliath Mountains group has highlighted the potential impact of the scheme on the landscape and wildlife, and also on tourism: the development could have negative effects on the amenity of the area for those who visit the Cairngorms for leisure. While renewable energy schemes can create new jobs in communities, they could also have a negative effect on another major employment sector in rural areas.

It is clear that there are competing interests at stake in the siting and construction of wind farms: the need for a greater proportion of renewable energy in the UK’s energy mix, and the need to protect our natural landscape and heritage assets. The job creation potential of such schemes must also be weighed against the possible adverse impact on the tourism sector.

The Spring Farm Ridge Development

On 22nd December 2014 the Secretary of State for Communities and Local Government refused planning permission for a commercial scale wind farm, Spring Farm Ridge, between Greatworth and Helmdon in Northamptonshire, overturning the recommendation of the Inspector.

He acknowledged that all communities have a duty to help to drive up the use and supply of green energy, but that this does not mean that the requirement for renewable energy will automatically take precedence over the environmental protection and planning concerns of local communities.

While the Secretary of State agreed with the Inspector that the benefits and disadvantages of the proposal were finely balanced, he disagreed with the Inspector as to where the balance should lie. The proposal would not accord with the Development Plan and, although there were some material considerations which counted in favour of the proposal, including the renewable energy benefits, the Secretary of State did not consider those benefits to be sufficient to outweigh the likely negative effects of the development, notably identified harm to heritage assets, as well as to the character and visual amenity of the area.

This decision highlights the competing environmental priorities and stakeholder interests which are at play in proposals for new renewable energy developments, and the challenges in determining whether renewable energy benefits should override the negative environmental impacts of these schemes in planning decisions. Perhaps there is a need for greater community engagement and careful consideration of the siting of such developments in relation to the natural environment in order to gain wider public acceptance for such schemes and to improve their chances of approval in the future.

Further reading

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In this article we look at past and present incarnations of Enterprise Zones, their potential to create jobs and growth, and issues to address in policy approaches.

Past experiences and lessons learned

The Enterprise Zone concept emerged in the UK in the 1970s. They were conceived by the planning academic Peter Hall, with the idea that removing all obstacles faced by businesses, such as regulation and bureaucracy, would allow enterprise to prosper, prompting a surge in the number of companies, employment levels and incomes in areas which had been ravaged by industrial decline and restructuring.

Enterprise Zones were created in the UK between 1981 and 1996 and were mostly concentrated in areas of post-industrial decline on the outskirts of towns and cities. The policy, as it was implemented, departed somewhat from the original, free-for-all vision: the zones concentrated on built environment challenges and the use of capital-based grants and rebates to drive growth.

The Department for Environment’s final evaluation found that approximately 126,000 jobs were created, of which up to 58,000 were additional, and that additionality was highest for manufacturing and lowest for retailing and distribution activity. It estimated that the cost per additional job created was around £17,000 (£26,000 at current prices), assuming a ten year job life, and that over than £2 billion (1994/95 prices) of private capital was invested in property on the Enterprise Zones, a public to private leverage ratio of about 1 to 2.3.

However, Enterprise Zones have been subject to much criticism, and it has been argued that, overall, they did not produce a lasting recovery in investment and employment. (Danson, 2013, p17). Critics have highlighted the displacement effects of Enterprise Zones, i.e. that many jobs created in Enterprise Zones were displaced from other areas (Sissons and Brown, 2011), and the expensiveness of the policy (Larkin and Wilcox, 2011).